In our effort to generate a suitable yeast host for human artificial chromosomes, we have modified the template region of the S. cerevisiae telomerase RNA gene (TLC1) to produce (TTAGGG)n, the human telomere sequence. Yeast strains with the tlc1-human allele are viable with no growth retardation, and express the humanized gene at a level comparable to wildtype. Southern hybridization and sequencing have demonstrated the addition of TTAGGG repeats to the ends of the endogenous yeast chromosomes and a yeast artificial chromosome. These strains will be useful for human artifical chromosome assembly and propagation, and will provide an important tool for studying the function of both yeast and human telomerases and their regulation by telomere binding proteins. The significance of these findings is three-fold: (1) this is the first report of one species producing functional telomeres of a different species, especially considering that the human telomere sequence is quite different from that of the yeast; (2) our data strongly suggest that the irregularity of the yeast telomere sequence, (TG1-3)n is determined entirely by the template and not by an intrinsic mechanistic nature of the protein component of the telomerase; and (3) these haploid strains could potentially serve as ideal hosts for the assembly and propagation of human artificial chromosomes since human telomere sequences will be added and maintained during the process. We will introduce our human artificial chromosome constructs into the yeast strains with the humanized telomerase template, propagate, and purify the construct DNA. The DNA will then be transfected into human cells in culture and its ability to form artificial chromosomes will be compared with constructs propagated in wild type yeast cells. In addition, the yeast strains with humanized telomerase template will be used to study the regulation of telomere synthesis and stabilization by telomere binding proteins.